The WACC of OUTFRONT Media Inc (OUT) is 7.4%.
Range | Selected | |
Cost of equity | 6.8% - 9.0% | 7.9% |
Tax rate | 3.2% - 5.0% | 4.1% |
Cost of debt | 5.1% - 9.1% | 7.1% |
WACC | 5.9% - 8.8% | 7.4% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 0.63 | 0.74 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 6.8% | 9.0% |
Tax rate | 3.2% | 5.0% |
Debt/Equity ratio | 0.95 | 0.95 |
Cost of debt | 5.1% | 9.1% |
After-tax WACC | 5.9% | 8.8% |
Selected WACC | 7.4% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
OUT | OUTFRONT Media Inc | 0.95 | 1.32 | 0.69 |
COR | CoreSite Realty Corp | 0.08 | 0.14 | 0.13 |
CUBE | CubeSmart | 0.32 | 0.41 | 0.32 |
EPR | EPR Properties | 0.71 | 0.51 | 0.3 |
FCPT | Four Corners Property Trust Inc | 0.42 | 0.17 | 0.12 |
LSI | Life Storage Inc | 0.15 | 1.04 | 0.91 |
NSA | National Storage Affiliates Trust | 0.75 | 0.56 | 0.32 |
QTS | QTS Realty Trust Inc | 0.31 | 0.56 | 0.43 |
SAFE | Safehold Inc | 4.16 | 0.18 | 0.04 |
UNIT | Uniti Group Inc | 5.63 | 0.33 | 0.05 |
Low | High | |
Unlevered beta | 0.23 | 0.32 |
Relevered beta | 0.45 | 0.61 |
Adjusted relevered beta | 0.63 | 0.74 |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for OUT:
cost_of_equity (7.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.63) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.